TDS on Property
Transactions (Section 194-IA)
Objective: This section is inserted vide the Finance Act, 2013 with
effect from 1.6.2013, with a view to expanding the TDS provisions on transfer of certain immovable properties
other than agricultural land.
Immovable Properties meaning: Immovable property means any land (other than agricultural
land) or any building or part of a building.
Agricultural Land meaning: Agricultural Land means agricultural land in India except the
following as defined under section 2(14)(iii):
Land within municipal jurisdiction having population
not less than 10,000 is excluded from the definition of agricultural land. Municipal jurisdiction can be known as
municipality, municipal corporation, notified area committee, town area committee, town committee or a cantonment
Any area within the specified distance from the
municipal jurisdiction as specified above is also excluded from agricultural land:
according to the last preceding
from municipal limits, measured aerially
Population more than 10,000
but not exceeding 1 Lakh.
Not more than two
More than 1 Lakh but not
exceeding 10 Lakh
Not more than six
More than 10
Not more than eight
Person responsible for deduction: Any person, being a transferee, responsible for paying any
sum by way of consideration for transfer of any immovable property (other than agricultural
Time of deduction: At the time of credit of such sum to the account of the
transferor or at the time of payment in cash or by issue of a cheque or draft or by any other mode, whichever is
Basic Exemption: No TDS is to be made where the consideration for transfer of
an immovable property is less than Rs.50 Lakh.
Definition of “Consideration”: Apart from value of property, “consideration” includes all
charges of the nature of:
Ø Club membership fee
Ø Car parking fee
Ø Electricity or water facility fee
Ø Maintenance fee
Ø Advance fee or
Any other charges of similar nature, which are incidental to
transfer of immovable property
Rate of Tax Deduction: The purchaser has to deduct tax @1% on the consideration paid
or payable on the transfer of the immovable property. (0.75% from 14.05.2020 to 31.03.2021)
The basic exemption is on the purchase price
paid or payable, not the stamp duty value. Hence, in case purchase price is Rs.45 Lakh and stamp duty is paid
on Rs.60 Lakh, no need to deduct tax. However, for the difference between purchase price and stamp duty
value, other repercussions under the Income Tax Act will follow like treating the difference as income of the
buyer and taking the same as full value of consideration in the hands of the seller.
Even amounts paid in instalments, if total
price for the immovable property exceeds Rs.50 Lakh, TDS is compulsory.
In case there are “n” number of transactions
for “n” number of immovable properties each below Rs.50 lakh but aggregate more than Rs.50 Lakh, there is no
need for TDS as the basic exemption is applicable amount paid/payable on each individual immovable
TDS is to be made even on payments to builder
whether paid in instalments or paid in lumpsum if consideration is not less than Rs.50
Even if the buyer is a property dealer,
dealing in purchase and sale of immovable property in the regular course of business, TDS has to be
In case PAN of the seller is not submitted,
TDS will be @20%.
Person responsible for deduction of tax at
source not to obtain tax deduction or collection account number.